April 22 (Bloomberg) -- The monsoon in India, which
provides more than 70 percent of annual rainfall, will be normal
this year amid forecasts for the emergence of an El Nino that
previously caused droughts, government officials said.

Rain may be 96 percent of a 50-year average of 89
centimeters (35 inches) in the June-September period, said two
officials with direct knowledge of the matter, requesting not to
be identified before an announcement by the state weather
forecaster on April 24. Actual rainfall may be 5 percent more or
less than the prediction, the officials said.

The monsoon is the main source of irrigation for India’s
235 million farmers and planting of crops from corn to soybeans
are dependent on timely arrival of the seasonal rains as more
than half of farm land is rain-fed. Agriculture represents about
14 percent of Asia’s third-largest economy, which is also the
world’s second-largest producer of rice, sugar, cotton and
wheat. Consumer price inflation averaged 10.07 percent in 2013
even as the nation harvested record crops.

“In case of a bad monsoon food inflation number will
further go out of hand,” Madan Sabnavis, an economist at Credit
Analysis & Research Ltd. in Mumbai, said by phone. “In which
case, the Reserve Bank of India’s ability to lower the interest
rates will become very much limited.”

Inflation Worries

Elevated inflation has prompted RBI Governor Raghuram Rajan
to raise the benchmark rate 75 basis points since taking over at
the central bank in September. Risks to inflation arise from
guaranteed prices for farm products, higher energy costs and
government spending on subsidies, according to Rajan. There is
also a threat from less-than-normal monsoon rains due to
possible El Nino effects, he has said.

The consumer-price index accelerated 8.31 percent in March
from a year earlier, quickening for the first time in four
months, according to the Central Statistics Office. The economy
grew 4.9 percent in the year ended March 31, after decade-low
growth of 4.5 percent the prior year, the Statistics Ministry
estimates.

Cotton futures in New York dropped for a second session
yesterday on concern normal rainfall will boost supplies from
India, the world’s second-biggest exporter. The July delivery
contract, which fell as much as 0.9 percent yesterday, traded at
93.18 cents on ICE Futures U.S. by 4:37 p.m. in Mumbai.

The India Meteorological Department will issue a detailed
monsoon forecast in June after this month’s first long-range
prediction, the officials said. Showers between 96 percent and
104 percent of the average are considered normal by the
department. B.P. Yadav, a spokesman of India Meteorological
Department, declined to comment.

El Nino Odds

Signs have been detected that El Nino is imminent,
presaging changes to global weather patterns in the months
ahead, the World Meteorological Organization said last week. The
chances that an El Nino will develop are growing, the U.S.
Climate Prediction Center said this month, boosting the odds to
65 percent from 52 percent. The weather pattern may develop by
July, Australia’s Bureau of Meteorology said today.

El Ninos occur irregularly every two to seven years and are
associated with warmer than average years. They tend to lead to
abnormally dry conditions over parts of Australia, the
Philippines and Brazil, and to more intense storms in the Gulf
of Mexico. Their counterpart, La Ninas, are associated with
cooler years.

Drought Years

India received normal or more-than-normal rains during only
three El Nino years out of the past 10 occurrences while the
remaining were drought years, according to data from the
meteorological department. Monsoon rainfall was the least in
almost four decades in 2009, when El Nino occurred last, data
show. Rice and oilseed harvests fell 10 percent, according to
Agriculture Ministry data.

An El Nino has not always resulted in weak monsoons in
India and mitigating factors this year may include comfortable
reservoir water levels and excess food grain stockpiles, Rohini
Malkani and Anurag Jha, Mumbai-based analysts at Citigroup, said
in a report last month.

Production of food grains from rice to wheat, lentils and
corn is seen at a record 263.2 million metric tons in the year
ending June after more than normal monsoon and cooler winter
boosted yields, according to the ministry.